EOS) Stock has a one month shocker. Are you buying now?

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NS Electro Optic Systems Holding Ltd (ASX: EOS) Stock prices have fallen 26% in the last 30 days. Does it buy stock?

Andrew Legget, an analyst at Motley Fool Australia, spoke with Chief Investment Officer Scott Phillips earlier this month to discuss whether tech companies are proficient in investor choices.

Interested readers can find their conversation perfectly here, On Motley Fool Australia’s YouTube channel.. Don’t forget, we will post a new’This week’s stock‘Every Wednesday video.

Currently, the stock price of ElectroOptic is $ 2.51.

Here’s a breakdown of what Legget thinks about ElectroOptic stock:

But first, what does electro-optics do?

Electro Optic is a technology company operating in the aerospace market.

Most of the company’s revenue comes from the defense sector, which manufactures remote-controlled weapons systems, auxiliary products, fire control systems, and sensor units.

There is also a communications department that creates terrestrial and space communications technologies.

The company is also under development SpaceLink – Satellite relay solution.

Electro Optic is also working on other exciting and up-and-coming technologies within its expertise.

Risks surrounding electro-optic market shareNS

The ElectroOptic strain has some drawbacks.

First, as Legget points out, there is always a level of ambiguity surrounding the business. Perhaps, of course, many of its defense contracts contain sensitive information, so investors need to trust the company’s management.

In addition, due to geopolitical tensions, ElectroOptic may set out to work with just a handful of countries.

In addition, Electro Optic has partnerships with the United States, Australia, Canada, the United Kingdom and New Zealand, so Legget says it will be the whims of the United States, which is primarily “the tycoon of the battle.”

Along with that sentiment, the decline in government defense spending can be disastrous for electro-optic sources of income.

Finally, the fulfillment of the company’s order was delayed by COVID-19 (new coronavirus infection).. Therefore, the backlog of orders is hindering short-term performance. Legget commented:

I don’t think [the backlog is] It’s going to be a long-term problem, but again, when you’re dealing with a focused customer base, when something goes wrong, even if it’s not your fault, it affects your results. prize.

Are you buying?

Still, Legget believes ElectroOptic shares will dominate the market in the long run.

He says he likes how the company has found a niche that allows jump-starts for other companies working in the defense sector.

Electro-optics has also built a strong relationship with weapons manufacturers. As a result, you can be confident that your product will work with products from other industries.

The company has also grown significantly over the past few years. Legget says it made about $ 30 million in revenue in 2015. But by 2020, it brought $ 180 million.

Electro Optic currently has an order backlog of approximately $ 397 million. Legget further states:

[Electro Optic] Do this if you risk weight all potential opportunities based on your chances of winning a contract. The risk weighting of potential pipelines in the future currently totals $ 3.1 billion. So this shows that there is a huge potential market there. If it can continue to operate as it does now, it may mean that the company is still growing a lot ahead of it …

[Electro Optic] I think this is one of ASX’s most innovative businesses. It operates in a market that has high barriers to entry and is already well established in that market. We are now also targeting some very exciting opportunities within the next year. This is if you can continue to run as in the past [the opportunities] Hopefully it will be a very profitable business in itself. If so, I think it’s far more valuable than it is now.

The opinions expressed in this article are current as of November 2021 and are subject to change over time...

EOS) Stock has a one month shocker. Are you buying now?

Source link EOS) Stock has a one month shocker. Are you buying now?

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